Dividend
A portion of a company profits paid out to shareholders, usually quarterly.
Dividends are cash payments from profitable companies to their shareholders. A stock priced at $100 with a $3 annual dividend has a 3% dividend yield. Dividends can be reinvested to buy more shares (DRIP), creating a compounding effect over decades. Dividend aristocrats are companies that have increased dividends for 25+ consecutive years — including Coca-Cola, Johnson & Johnson, and Procter & Gamble. Qualified dividends are taxed at the lower capital gains rate (0-20%) rather than ordinary income rates.
Try it yourself:
Open Dividend Calculator →